Completed 2 paid jobs in 3 months... do i need to register an ABN?

[ice]

Hi Everyone

I've been on the ATO website for WA and how much work i get does not add up to needing to register a business- it's a hobby that i obtain small funds for.

The reason i ask about the ABN etc is a workplace has asked me to take some staff photos for them for their website and i believe they'll want a receipt etc. Do I just go down to officeworks and write out receipts that way? Do i need to look at such things as an ABN or registering my business name? I use my first and middle name as my business name and have a domain and a website/ blog as well. The other thing i wonder about is insurance.

I do not intend to become a business- but do intent to charge people sporadically for needs throughout the year. As indicated, I was paid $400 for a wedding, and $50 here and there for portrait shoots. So far, i have just asked clients to EFT me the amount and no one has asked for a receipt.

Should i just be making an appointment to see an accountant and ask all these questions?

Thanks guys

Imogen

[Wayne]

If you are charging people and don't quote an ABN, they client is supposed to withhold 48.25% of the payment. I am not at home to ask my wife who will know the answer with certainty, however that may only apply if you are deemed to be carrying on a business, which is measured against a set of criteria which you have found via the ATO.

A quick call to the ATO would answer your question, or visit their website.

[Longshots]

If you're charging people you are running a business - its really that simple.

[peterb666]

Info here... http://www.ato.gov.au/businesses/content.aspx?doc=/content/19178.htm

If the amount is over $75 and no ABN, the person paying is supposed to withhold 46.5% and send it off to the ATO but most people are not aware of that. The system is pretty daft.

Sent from my GT-I9100 using Tapatalk

[camerasnoop]

You may find something in here regarding a hobby that could be to your advantage. Do check with an accountant though.

http://www.ato.gov.au/content/downloads/nat3346.pdf

[Longshots]

why is the system daft ?

you charge money , then you're in business. Simple you need an ABN easy to get, and its free. Why is that daft ?

you could do these things for free - then you wouldnt ave to deal with a so called daft system

btw do you also have pl insurance because as soon as you charge you might like to protect yourself from a pl claim.

[davsv1]

You don't have to have an abn if you earn under $75k/annum,(I think) it used to be $50k/annum, down side is of course you cannot claim get expenses. But of course see an accountant.
You do need insurance though, both gear and public liability, for your own financial safety. Generally home insurance won't cover your gear if you are making money.

[peterb666]

You don't have to have an abn if you earn under $75k/annum,(I think) it used to be $50k/annum, down side is of course you cannot claim get expenses. But of course see an accountant.
You do need insurance though, both gear and public liability, for your own financial safety. Generally home insurance won't cover your gear if you are making money.

You are thinking of registration for GST which is separate from an ABN. You can have an ABN but not be registered for GST if you fall under those limits.

The problem with registering for an ABN requires you to be undertaking the activities of an enterprise and the thing that excludes hobbies is one of the qualifying criteria "the activities are of a reasonable size and scale" - FAIL - ABN is refused.

One of the questions on the self-test before applying for an ABN is "Are you conducting your activity predominantly as a hobby?" If you answer YES to that, you are NOT allowed to have an ABN.

See here... http://calculators.ato.gov.au/scripts/axos/axos.asp?CONTEXT=&KBS=ABN_Entitlement.xr4&go=ok

BTW, to register for GST, you must first be deemed to be running a business but as the ABN check has thrown you out of the system, tough luck. On the plus side, you don't have to add GST to what you charge clients (but of course you cannot claim it back either).

[peterb666]

why is the system daft ?

Because the responsibility for withholding the tax and remitting it to the ATO is that of the person being supplied the goods and services, not the supplier of the goods and services. The idea behind this is that it catches out people who don't declare this sort of income in the tax returns.

Now the problem with the system is, Aunt Nellie asks you to shoot a wedding and will pay you $500. Aunt Nellie is required by law to withhold 46.5% of that amount and send it off to the ATO. If she doesn't, Aunt Nellie can face penalies. How many Aunt Nellies know this and withhold and remit the tax unless she has a written notification that there is an exemption from withholding tax. I would suspect the number of Aunt Nellies and most other people that have a level of knowledge of this is close enough to none.

It isn't a workable system.

[Longshots]

What the "daft law" does is ask people to report their earnings - earnings = which means income.

I'm not an accountant, or tax advisor, so wont go into talking about the details of the situation. I just dont think its daft to go and get an ABN, and declare the income. The system is like many systems, it has its faults; on that I'm not disagreeing.

The Aunt Nellie is a little bit of a red herring, here, because the question wasnt about the myriads of Aunt Nellies out there, which I dont dispute wouldnt have a clue about this, its about a company paying an individual.

Correct me if I'm wrong, but that there were three questions posed by the OP ?

1)

The reason i ask about the ABN etc is a workplace has asked me to take some staff photos for them for their website and i believe they'll want a receipt etc. Do I just go down to officeworks and write out receipts that way?

Yes IMHO, you need an ABN - because you infer by discussing a workplace as opposed to an Auntie Nellie that you're going to be dealing with a company, sole trader, or partnership. I also would do it to support your domain name. For instance you dont need an ABN to have a .com - but (I believe) that you do need one to have a .com.au - now how ill would you feel if you spent the next few years slowly building your name up, only for some obnoxious soul to come along and a) register the business name that you had been using but never registered, and b) also then went and bought the .com.au
2)

Do i need to look at such things as an ABN or registering my business name? I use my first and middle name as my business name and have a domain and a website/ blog as well.

While each state have different specific rules, in Qld its my understanding that you would indeed need to register your business name, and you would be wise to, as if you intend to do more work, as if you were called Imogen Unknown and called yourself Imogen Unknown Photography, that is ok (ie planting a description after your full name), but if you called yourself Imogen Photography (ie omitting your last name), that is not OK. In Qld the department that oversee this area is incredibly helpful and the cost of registering a business name, is often given back to you in vouchers for information seminars on starting a new business, and other business advice - if you're in Qld, this is the url:
http://www.sd.qld.gov.au/dsdweb/htdocs/slol/

And finally
3)
The other thing i wonder about is insurance.

Yes I would personally advise both gear and public liability, for which you will need an ABN. The ABN is free. The insurance is not, and like any insurance is cost related to the risk. Public Liability insurance varies considerably but expect an annual fee of between $250 - $600 for a min cover. This covers you if someone trips over your bag, or tripod, or you do something while on a commercial/public premises in the course of your work (paid well or badly), that causes someone to have an accident, or you cause material damage to property. All policies differ, check the PDS, and T&Cs. Cost of camera insurance varies hugely. If you add it to your home and contents, check if you can claim if you get paid (well or badly again makes no difference), insurance companies check on these things, as its their game/intent to find a particular detail as to why you arent covered. There have been various topics about where to get insurance for your gear on AP. So yes IMHO, start as you mean to carry on.





And the facts are, that unless you have an ABN, a company - who are acting correctly - have to by law withhold a percentage unless someone has an ABN.

Its about as easy as blowing your nose to get an ABN - I dont see what the problem is ?

Again, if you charge money, then you are in business. Whether you are making a huge amount or a little amount, its a commercial transaction that requires you to register as a business. And if you are in business, you need an ABN. Which BTW if you want to go out and get yourself insurance to cover business activities, hey presto, again you need an ABN. As an aside, if anyone is relying on personal cover for insurance, if they are using their photographic gear and its in a situation that is considered a commercial transaction, your personal insurance cover disappears as quickly as Julia Gillards memory of exactly when she helped write her own acceptance speech. And, again, as the ABN is free, I'm not sure what the problem is. I'd be suggesting a case of get one anyway, as you never know if you might hit the big time :)

My personal advice to the OP is to read the Aus Photog Forum Guidelines on people offering legal and financial advice.


[30] Requesting/Providing Financial, Medical or Legal Advice on Ausphotography:

Australian Photography is a website with broad topic coverage. However, when it comes to medical, financial and legal advice, it's always recommended to seek advice from a qualified professional, rather than asking about it on Australian Photography. As such, Australian Photography takes no legal responsibility for posts seeking or providing Medical, Financial or Legal advice. Members use any advice provided via Ausphotography at their own risk. The site owner, moderators or members cannot be held liable for any Medical, Financial or Legal advice posted on the site.

Basically, the OP asked if they should sit down with their accountant - in short - IMHO my advice is Yes.

[davsv1]

You are thinking of registration for GST which is separate from an ABN. You can have an ABN but not be registered for GST if you fall under those limits.

.

Yes you are quite right, my mistake:o

[rum pig]

I do woodturning for a hobby and I sell my products under a ABN when I go to my accountant at tax time if I can show her I made a loss I don't need to claim anything and as I always make a loss:D I can't claim the loss against my income.
But as most have said ask your accountant for the advice.
I was told that if you claim the loss each year when you do make money you can offset it by the losses you have made but not 100% on that one.

[kiwi]

Just for clarification

"called yourself Imogen Unknown Photography, that is ok (ie planting a description after your full name" is not actually OK - I rang Fair Trading QLD as asked them directly....anything apart from your fisrt and last name and you need to register a business

[Longshots]

Just for clarification

"called yourself Imogen Unknown Photography, that is ok (ie planting a description after your full name" is not actually OK - I rang Fair Trading QLD as asked them directly....anything apart from your fisrt and last name and you need to register a business





Thanks for clarifying - again always best check with the appropriate place - Smart Licence Office in Brisbane is spectacularly helpful.

[maccaroneski]

If you're charging people you are running a business - its really that simple.

No it isn't. Quoting from the ATO articles linked below:

"There is no simple answer to whether you are in business or not"

http://www.ato.gov.au/corporate/content.aspx?doc=/content/00199712.htm

http://www.ato.gov.au/youth/content.aspx?doc=/content/66884.htm

[Longshots]

yep very good !- ok youre right if that makes you happy -its not simple.

But once youve trawled through the links you've gone to the trouble posting, why not also offer answers to the questions posed instead of splitting hairs.

Clearly a waste of time going to the trouble of offering opinions (it was just my opinion !) with potential answers to the OPs questions - which I note you've offered none. Well done - good job.

[peterb666]

Yes, it probably is better to click on the links provided and read the information from the ATO. If you cannot work it out from the information provided, then consult with those that have the experience to make the assessment of whether you are conducting a business or a hobby.

There are distinct advantages to each depending on your circumstances.

With no business plan, no desire to make the work a business, limited income and no regular pattern to the income it appears to be fairly straight forward according to the information provided by the ATO. The advantage to that is that you don't have to declare the earnings from the hobby as "income" and it save a lot of additional costs including accounting costs and time. If there is no prospect of making your hobby profitable, and the occoassional job here and there won't do that, then the hobby ruling sounds good and a link has been provided to a simple form to escape the dreaded withholding tax.

[ricktas]

Just a reminder, more for the OP as well as others

[30] Requesting/Providing Financial, Medical or Legal Advice on Ausphotography:

Australian Photography is a website with broad topic coverage. However, when it comes to medical, financial and legal advice, it's always recommended to seek advice from a qualified professional, rather than asking about it on Australian Photography. As such, Australian Photography takes no legal responsibility for posts seeking or providing Medical, Financial or Legal advice. Members use any advice provided via Ausphotography at their own risk. The site owner, moderators or members cannot be held liable for any Medical, Financial or Legal advice posted on the site.

Any advice you receive on AP should be checked with relevant person(s) who are qualified to provide the advice. Using advice provided on AP is at your own risk.

[etherial]

Without looking at the ATO information of the day, my understanding from when I did go through the whole ABN and GST registration fun a few years ago to set up a business (non photography related) was that if primarily conducted the activities as a hobby with no real chance of making a regular profit (which is pretty hard to do if you're considering the equipment and other costs) then it would be classed as a hobby and your 'free to go on your merry way'.


*Insert standard disclaimer here* :th3:


Don't turn it into a business, it is the best way of putting you off a wonderful hobby.

[maccaroneski]

Clearly a waste of time going to the trouble of offering opinions (it was just my opinion !) with potential answers to the OPs questions - which I note you've offered none. Well done - good job.

Correct, I chose to offer no half-baked, simplistic, or incorrect opinion. Rather, I chose to direct the OP to the definitive source material written in layman's terms which is designed to assist someone in precisely the OP's position.

What MUST have I been thinking?

[camerasnoop]

I know this thread is now dead, and Elvis has left the building, but I just want to clarify one more statement above. The Aunt Nellie example is not correct. The very first exemption to deducting witholding tax when no ABN is quoted is where the "payer" (as opposed to the payee), "is not making the payment in the course of carrying on an enterprise in Australia". Aunt Nellie does not have to deduct witholding tax.

Once again, DO consult a Tax Accountant.

[98kellrs]

Without looking at the ATO information of the day, my understanding from when I did go through the whole ABN and GST registration fun a few years ago to set up a business (non photography related) was that if primarily conducted the activities as a hobby with no real chance of making a regular profit (which is pretty hard to do if you're considering the equipment and other costs) then it would be classed as a hobby and your 'free to go on your merry way'.



This was my understanding from the ATO website too. They quoted an example of Joe Bloggs makes furniture from his shed on the weekends and sells a small number per year whilst retaining a full-time job, he is a hobbyist.

Certainly worth checking with a tax accountant though, I'd hate to get slapped with a tax bill for that massive $50 photoshoot :rolleyes:

[peterb666]

- deleted -

[camerasnoop]

No, you miss the point Peter. If the person paying the amount "is not making the payment in the course of carrying on an enterprise in Australia", then it doesn't matter whether the photographer is a hobbyist or conducting a business. Auntie Nellie is a private person paying for the wedding. She is not doing it as a business, and is not required to withhold.

See here:

http://www.ato.gov.au/content/38509.htm

You'll notice that link is under the "Business" tab on the website. It's also titled as "A Guide for Business". Deducting withholding tax is something that businesses must do. Private individuals would generally not be required to act as tax collectors. To deduct withholding tax, you must register and show it on your BAS Statement. Aunt Nellie isn't required to complete a BAS Statement.

That exemption refers to the status of the payer, NOT the payee - as I pointed out.

[peterb666]

Correct - missed that bit. So yet another out for the hobbiest and the person making the payment.

[camerasnoop]

Absolutely! And that is why they can undercut the pros in price. So they don't have an expectation of making a profit. They don't have to declare the income (maybe), and no-one has to deduct withholding tax from a wedding payment to them. Those are significant price advantages.

[ice]

right. thanks everyone. off to the accountant then..

[reaction]

a bit late to the party, but I know photographers who have tax withheld by a studio even tho they supplied their ABN

[ricktas]

a bit late to the party, but I know photographers who have tax withheld by a studio even tho they supplied their ABN

Then they should be heading to their nearest ATO office and reporting them/it.

[reaction]

I told them it sounds weird but they 'just claim it back at tax time' with their deductions.

[wheaty78]

I spoke to an accountant about this last year, and I was told that as long as you dont run in a business - like manner (quite a grey area) you are classified as a hobbyist and free to earn money from your hobby.. He said that there wasn't figures set in stone, but rather the way you run that defines you as a business rather than a hobbyist. I would suggest that you discuss your individual circumstances with an accountant.